Brooke’s Note: Have you heard of Blueleaf? I hadn’t either until it appeared as part of a MoneyGuidePro deal last month. Fortunately folks like James Carney and Joel Bruckenstein are more attentive to rumblings on train tracks than I am and so we were able to not only get an idea of what Blueleaf does but just what to think of the bold claims about what it can do. Blueleaf founder, John Prendergast, comes by this start-up honestly in the sense that it arose out of a need he heard expressed by friends. He exudes a teflon confidence that is a much a part of this article as anything else.

Aggregation of data and integration between technology platforms has long been a problem for advisors, who are forced to call each custodian every time a feed breaks and weave together multiple technology systems for their specific needs — creating even more contact points for error and time wasted.

While plenty of companies have tackled the aggregation issue, such as ByAllAccounts, they’ve thus far been bulky or hard for advisors to use, says John Prendergast, chief executive of a portfolio accounting service called Blueleaf.com. “It’s like buying copper pipe when you want a finished bathroom. Blueleaf is the finished bathroom.”

He believes his Cambridge, Mass., firm, with more than 100 advisors onboard — and big deals brewing with MoneyGuidePro and Redtail — has found the answer.

Open API

While Blueleaf offers simple portfolio reporting and accounting, a client portal and bundled account aggregation for $450 a month for up to 100 households, what Prendergast really thinks is going to change how data are aggregated and delivered is the company’s open API — “not common in this industry,” he says. Salesforce and TD Ameritrade Institutional’s Veo are the two products currently known best among RIAs for this approach of letting vendors see under their hood to form interconnections from outside. Competitors lie Schwab who prefer to do all the wiring themselves say that the approach is flawed because customers may suffer more bugs than is acceptable in this relatively haphazard process.

By running an open application programming interface as opposed to a closed one, Blueleaf is hoping other programs will write products using that code that integrate directly with Blueleaf. This, ultimately, will allow advisors to access all their needs in one place, like an Apple store or “lots like Salesforce for wealth management integration,” says Prendergast.

Mint.com for Advisors

But, there are plenty of skeptics saying Blueleaf isn’t anything more than a glorified version of Mint.com for advisors — a comparison that Prendergast, himself, makes as well but which he clarifies isn’t entirely accurate, since Blueleaf does deliver SEC-compliant performance reporting.

“It’s basically doing what Mint.com does, but for advisors,” says Joel Bruckenstein, founder and co-chair of Technology Tools for Today. “It’s more like a portfolio snapshot.” That certainly provides some value for some advisors, he says, but maybe not as much as Blueleaf would have you believe, particularly when it’s hard to prove that their aggregation is better than others. See: Envestnet unbundles portfolio management software for RIAs and it won’t be a sideshow.

James Carney, president and CEO of ByAllAccounts, says that it’s hard to say if Blueleaf has better aggregation than anyone else, since they’re using his firm just like everyone else.

James Carney: We’re just the chip inside. Nobody’s designing their own chips.

“We’re just the chip inside. Nobody’s designing their own chip,” says Carney. Most data and technology companies, he says, are using his. What makes any one offering different than another is what makes a Dell different from a Vaio: how it’s implemented, presented, and the quality of that packaging.

The value that Blueleaf adds is in the beautiful, well-designed client portal and the easy-to-use reporting for advisors, he says.

Truly getting all the data in one place to provide total performance reporting is actually not that easy — and isn’t as solved a problem as might be widely assumed. “That’s been harder to achieve than people would like,” says Prendergast.

That’s something Bruckenstein can agree with. “Nobody has totally solved aggregation,” he says. While ByAllAccounts has gotten better in the last few years, he says, it’s still hard to reconcile all the data and make sure it’s 100% accurate coming from so many different sources. And, if it’s only 95% accurate, that can really be a problem for those 5% of clients.

“Keeping data clean is not nearly as easy as you think it is,” Bruckenstein adds.

Opening the doors

The objective that’s been harder to achieve — and a long time coming — is the open architecture necessary for companies to write products to a particular system. An open API encourages innovation, says Prendergast, because it allows individuals to write code with little overhead and allows companies to build off one another. “It’s hard to overstate the importance of an open API,” he says.

Traditionally, open APIs have been common in Silicon Valley, but have not been as popular in the financial or advisory space. That is starting to change. Open APIs are “becoming more common,” says Bill Winterberg, the principal of FPPad.com. Most notably, TD Ameritrade recently opened up its system to sharing in a controlled way. See: TD Ameritrade showcases what API can do with slick Veo-iRebal harmonization.

Joel Bruckenstein: What’s in it for Redtail to write something to Blueleaf?

The question, then, is why would someone want to write a product to easily add on to Blueleaf? It takes time, money, and, while it can be beneficial for the company to access Blueleaf’s clients, it may not be worth it.

“What is in it for Redtail to write something for Blueleaf?” asks Bruckenstein, when Redtail has 50,000 users.

Redtail, MoneyGuidePro jump on Blueleaf bandwagon

In January, MoneyGuidePro completed an integration with Blueleaf, which Prendergast says was done easily in just three days because of the way the open API is set up. And, last week, he says, Redtail Technology finished an integration with Blueleaf, which hasn’t been announced yet and which will make the Redtail product available directly through the Blueleaf system. The idea is that ultimately advisors will be able to access everything in one place without any wasted time. See: MoneyGuidePro back on a roll after the.

“There’s a whole ecosystem here being built,” says Prendergast, who says the firm has plans to add more financial planning, customer relationship management and portfolio accounting systems to the Blueleaf arsenal via integrations similar to previous ones.

“We seek out companies like Blueleaf,” says Tony Leal, CTO of MoneyGuidePro, because it’s important for a financial planning tool to have someone else able to do the aggregation and then integrate smoothly and quickly.

When Prendergast approached MoneyGuidePro about a year ago with his ideas and a demo, Leal says they were “so impressive.” He wasn’t too concerned that the portfolio reporting company was young and small — “That’s where the creativity comes from,” Leal says — and was won over by Blueleaf’s ambition and plans and by Prendergast’s experience. “We wouldn’t have just done it willy-nilly,” says Leal.

Bruckenstein points out, though, that it’s yet to be seen how many advisors will use these products that have been written to Blueleaf, how well it works, or how profitable it will be.“The devil is in the details,” he says. But, Leal says he’s not worried. It’s only been a few weeks and already there are a handful of customers on the system.

“So far, it’s been really positive,” says Leal.

Little guy with big plans

Whether or not Blueleaf is really solving the problem of data aggregation and integration “depends on how you define the problem,” says Winterberg. “If you define the problem as: do clients really understand their performance reports? Blueleaf has a solution where reports have a little more value, more meaning.”

At $450 per month for up to 100 households — with prices scaled for different advisor sizes — Blueleaf isn’t hoping to replace Orion or Performance Center. In fact, a number of clients run Blueleaf in addition to Orion and Performance Center because it provides an extra tool, says Prendergast.

The idea is just to offer a simple reporting system and client portal for the little guy, who, Prendergast hopes will grow with them. Since rolling out to advisors in late 2011, he says, Blueleaf has attracted more than 100 advisors with about 3,600 end-clients. Though his firm offers a free 30-day trial, Prendergast says all the advisors it counts as customers pay for the system. And, Blueleaf expects that number to more than double in the next year.

Once there is a tipping point of advisors on the system, the plan is to become a hub for wealth management data systems.

“Our goals are modest: to change the world of wealth management,” said Prendergast.

Who is this guy?

Prendergast, a former advisor who is also the co-organizer of the Lean Startup Circle in Boston, received calls from dozens of friends during the 2008 crash looking for help and advice. It turned out that one of the biggest problems, as they tried to get a grip on their finances, was they didn’t even know exactly what all they owned or where it all was.

Since he was looking for a new venture at the time, Prendergast figured: Why not solve this problem. After receiving his MBA from Northwestern in 2003, Prendergast has worked for Jeffries and Co., been an entrepreneur in a number of ventures, and currently serves as an advisor to three financial startups.

As he describes himself on LinkedIn:

“In my career, I’ve learned to put chicken on a spit four at a time, turned around a software company, memorized the perfect formula for brewing coffee, sold businesses for half a billion dollars, and had the pleasure of working with fantastic people.”

John Prendergast said:

February 11, 2013 — 4:45 PM UTC

All in all this is a well balanced article. There are a couple of important corrections I’d like readers to be aware of.

1) We work with Yodlee (Fidelity, Bank of America), not Cashedge.2) We’ve never said that our aggregation is better. It’s that aggregation is only part of managing all your client account data – that’s what we do. We manage custodial, held-away(account aggregation) and manual/offline assets data.3) Rather than focusing on industry experts, the people we want to impress are our customers and partners. So far, so good.

Thanks much.John PrendergastCEOBlueleaf

Jason Wenk said:

February 11, 2013 — 5:19 PM UTC

I’ve been using Blueleaf since their beta in 2011 – and couldn’t be happier with their product and service.

What Blueleaf does is make the client experience better, and my firm run better. In many ways, it’s the little things.

- The automatic weekly email updates are awesome. 52 automated client touches per year with exactly what the client wants to know (What do I have? How am I doing?).

- All of the assets, all in one place. This is huge, and Blueleaf makes it dead simple. Clients love it, and it’s immensely helpful to really know where all my clients assets are, how they’re allocated, how they’re performing, etc.

- It’s beautiful, and client friendly. Anyone who’s used most of the larger aggregation services is probably familiar with how complicated and un-user friendly their portals are. Blueleaf is the opposite. All clients, regardless of their tech-savviness, get exactly the info they want/need. The quality design transfers a better image to my firm.

- It’s a referral generating machine. Clients love it, and they tell their friends about it. I’ve used a lot of other services in the past and never got raving compliments from the reports. With Blueleaf, at least monthly I get an email or phone call so positive it makes me blush.

John and his team at Blueleaf ARE changing the world of wealth management. For the money, I think it’s right there with Redtail in terms of immense value and daily operational excellence. The advisor and client experience are awesome.

Bravo guys on building this. I sincerely wish you the best, and hope advisors and tech gurus alike start to see Blueleaf for what it does – instead of trying to figure out what it is.

Cheers,

jw

Brooke Southall said:

February 11, 2013 — 5:24 PM UTC

Thanks for the comments, guys. I just replaced Cashedge with Yodlee in the article.

Brooke

Joe Baker said:

February 11, 2013 — 5:59 PM UTC

I have been using Blueleaf for about 6 months now and it has exceeded my expectations. Here’s why:

- I no longer need to generate quarterly performance reports. Clients can access this information 24/7 on Blueleaf for any time period they wish.

- Clients love the simplicity of it. Blueleaf does what every client wants: it shows them what they own and how much money they are making or losing.

- I am actually getting emails and calls about how nice it is to look at all of their assets in one place.

- It is a selling point when meeting with potential clients.

I only wish Blueleaf would have come along about 10 years ago. Great job guys and keep up the good work!

Richard Dee said:

February 11, 2013 — 6:16 PM UTC

I implemented Blueleaf late last year as I opened my firm, going out on my own for the first time. The client feedback has been overwhelmingly positive. The weekly summary email is well appreciated by clients. Adding held-away assets without creating Custody issues for my firm is made easy through Blueleaf through their user-friendly interface. Blueleaf has created a client-friendly interface that is easy to use regardless of technological saavy; yet still impressive and appealing to the tech crowd. Of course, account aggregation technology has helped me grow my practice and streamlined aspects of the financial planning process. It has helped me better manage held away accounts and engage in an asset location strategy for applicable clients for increased tax efficiency. I have noticed that clients seem to log in to their portal when the financial news is bad. One client mentioned it provides him peace of mind to have one place where he review all of his data; and see that the scary news isn’t that scary. In other words, he doesn’t have to wait for his quarterly performance report to know how the bad news affected (or did not affect) his financial circumstances. Clients can see the diverification of the portfolio and rebalancing process work in real time in conjunction with the news, and this reinforces my messaging. The bottom line is that this tool has elevated my communication with my clients, provided them additional peace of mind, delivered the results in a user-friendly yet sharp interface, provided me additional insight to my clients’ overall financial circumstances (updated daily), and has generally been a tremendous value-add to my practice. When you review the software to see if it is right for your firm, I would recommending using the 30 day free trial to provide your closest client relationships a “test run”. Get their feedback. After the free trial, my clients and I were hooked. Also, as an aside, but very important, John’s support staff has been phenominal. Rarely have I had any issues (the only real issue was when I changed Master Account numbers at my Custodian), but when issues arise John’s staff has identified and addressed the issues before I even knew they existed. The support staff is proactive, which is a rarity for software priced so attractively. Many people are afraid of “startups”, but that is where disruptive innovation comes from. Unlike the marketers that call my office on a daily basis, Blueleaf has something of value to offer both advisers and their clients. That value comes in both tangible and intangible form. I would argue that the intangible is of the most value, and difficult to recognize without a test drive.

Tommy Sikes said:

February 11, 2013 — 7:05 PM UTC

I agree with everything Jason has said, plus I see it as a terrific business building tool.

For those hourly/planning clients who aren’t ready yet for a full-time portfolio manager, I can help them set up a DIY Vanguard account. Then we can link their new account to me via BL. They’ll get a weekly update with my picture. So when the time comes for the semi-annual review, I don’t have to request their latest statements, etc. It’s all there updated daily. I can also set proactive alerts to know when allocations drift out of range and contact them. Talk about service!

Plus I can see when they do meet my minimums for AUM clients, and the transition can be seamless (b/c they still get the same weekly email, regardless of where the accounts are custodied). My firm can be completely custodian “agnostic” (though I have my fav’s (Folio Institutional)).

For a prospective AUM client, instead of requesting all their statements I just ask them to connect all their current accounts. Often when they come in for the first meeting, I’ll know more about their assets than their current advisers (via the integrated Holdings summary and Morningstar reports).

The biggest issue I’ve found with this is that many investors have never set up online access to their accounts. It’s an extra step, but once you help them set that up, they see how easy and beautiful the BL system is.

I’m looking forward to more integration with financial planning systems like Instream Wealth…

Thanks Blueleaf!!!Tommy

Rich Feight said:

February 11, 2013 — 7:10 PM UTC

The real key to Blueleaf is time. As a GenX advisor balancing family and running my business, Blueleaf answers a lot of my clients’ questions before they ask them.

For example – The market just kicked butt the last month, how did I do? No longer asked. International seems to be making a come back. Do I have any? Answered on Blueleaf. Everyone keeps saying that bonds are in a bubble, should I be concerned? After logging into Blueleaf, they can see that over the last few months bonds seem to be flat.

While these are more technical questions for the clients that are a little more savvy, they illustrate Blueleaf’s value in a nutshell: transparent, current information. Clients know how much they have and how they are doing at all times. I’ve even considered stopping quarterly reporting all together… another time saver.

Josh Kettleson said:

February 11, 2013 — 7:23 PM UTC

BlueLeaf is as advertised: Dead simple. On top of being extremely easy for clients to use, it is also “cool” in an otherwise sometimes boring industry. I have had nothing but a positive reception from my clients. I was impressed that within 30 days of subscribing to the service, John called me personally to go over key features and benefits of the system. I look forward to growing my business with BlueLeaf.

Katie said:

February 11, 2013 — 7:51 PM UTC

I had a long term client email me for the first time EVER – and it was thought his blueleaf note sharing capability…encourages simple communication. Simple means people actually use it

Micah said:

February 11, 2013 — 9:30 PM UTC

I would agree that account aggregation has not yet been mastered, as it is still a bit of a messy process. It takes so little to throw a wrench in an automatic reconciliation. Blueleaf does the account aggregation as well as anyone though and tries to deliver on account aggregation and reporting in a way that is truly usable by the client. I have been using Blueleaf since early 2012 and haven’t seen anyone else whom I would consider a competitor.

Susan Templeton said:

February 11, 2013 — 10:04 PM UTC

The article says that the pricing is $450/ yr and then later says it costs $450/ month. Which is correct ?

John Prendergast said:

February 11, 2013 — 10:09 PM UTC

Hi Susan,

Our pricing is all available on the web including all available discounts here: http://www.blueleaf.com/advisor/pricing/

The $450 example is a monthly number for up to 100 households before discounts.

Hope that helps.

Kelly said:

Greg Brown said:

February 12, 2013 — 10:05 PM UTC

Blueleaf is a quantum leap ahead of other portfolio management software. It’s intuitive for both advisor and clients, displays relevant information in a beautiful dashboard, automates a tedious task (getting that initial client snapshot) and has some really nice proactive features.

I’ve been paying for and using Blueleaf since Oct 2012, so I’ve had plenty of time to evaluate the system and receive actual feedback from my clients. What I like:

-My clients enjoy seeing all their accounts in one place, updated daily, even if I’m not directly managing certain accounts.

-I can more easily make the case for charging on held-aways, esp. 401ks, when everything is aggregated at Blueleaf.

-Even my older clients have been able to easily add held-away accounts, because the user interface is so simple.

-Quarterly reports literally take 2 clicks. Moreover, they are visually appealing and simple for clients to read.

-Proactive reports are great; especially for notifying me when a client has deposited money that needs to be invested.

-The weekly balance emails have been received very positively . This is unheard of transparency.

-Service is great (and I’ve certainly asked heaps of questions)

-This is a biggie: My clients really use it. With other clients portals, I have about a 10% adoption rate (if that). With Blueleaf, it’s 90%, and I can see my clients check it regularly.

What Blueleaf has accomplished so far is impressive, but where they are headed is even more exciting.

Keep the innovation coming!

best,Greg

Tom Roberts said:

February 14, 2013 — 4:22 PM UTC

As an hourly advice only financial planner with DIY clients, I was looking for a way to provide clients access to all their account information in one place. Blueleaf gets this done, allows clients to control access and does it at a reasonable cost. Clients also like the idea I have up to date information on their holdings without having to send me updates.

Clients like being able to see their entire allocation in one place – a reason to put all their accounts on Blueleaf. The presentation is clean and simple. Even clients with all their assets at one brokerage like it for its uncluttered view, ability to easily dive into the details and easy access to Morningstar reports.

I now hear from clients when they receive the weekly email update. This provides another touch point and it comes from an independent source.

Clients have had only a few problems getting accounts linked. Blueleaf’s client services have been able to quickly resolve the problems, within one or two days, and get the accounts hooked up.

When we meet to discuss their investments, clients are much better informed and we can focus on the areas needing attention rather than just updates.

My time spent gathering quality client data has decreased.

I checked out a number of options before deciding on Blueleaf. They have delivered on what they promised. That’s a plus! I would like to see more integration with other systems I use. Just recently they announced collaborations with MGP and other programs so they are moving the right direction.

Candice J. Hutton said:

February 27, 2013 — 2:32 PM UTC

After reading the article, I felt compelled to share my experience with Blueleaf Advisors. Since becoming an Independent RIA, I have spent numerous hours researching Portfolio Management Software. “Passionate” would be an understatement in my quest for PMR Software.

After two years of research, I came across Blueleaf Advisors. Here are my thoughts:

Confusion What RIA’s need is a PMR service that provides a Client Portal, Client Vault, Performance Reporting, and Billing.

After speaking with nearly every PMR software provider, I would end the phone conversation discouraged and completely confused. One PMR tool offered a Portal, another a Portal and Performance Reporting. Then one might offer a Portal and a Client Vault. Some had a billing feature and other did not. Finding a PMR that met all my needs at a reasonable price, has probably been the biggest frustration in starting my own firm.

Essentially there are only two parts of PMR Software. The “experience” the user has with what I call the “shell”, and aggregating the data.

Look and Feel of the SoftwareHands down, Blueleaf wins the end-user “experience” award. If you try Blueleaf, it will become clear that CEO, John Prendergast, has been an advisor.

The design and layout of the software has such a modern and clean feel to it. I haven’t seen anything like it. Hat’s off to the absolute genius who wrote the client portal “invitation letter”!

AggregationAggregation is one thing. Obtaining accurate figures from aggregation is another.I’ve personally used BAA and find the system archaic and extremely time intensive. Blueleaf can aggregate most accounts through Yodlee. Most of the time, my figures from BAA were wrong. Sometimes a few dollars, and sometimes thousands.

What is “Screen Scraping” and “Data Scrubbing”? These are terms i became all to familiar with in my search. The industry says Yodlee, Mint, and Cash Edge are merely taking an image of the data, whereas BAA has a direct feed with the custodian. My experience was that I spent much of morning communicating the inaccuracies to the aggregation company. After six months, I realized that I had essentially become a a professional “data scrubber”.

PricingI personally feel that a small RIA can have their Assistant manually input figures for the few accounts that may not connect through Yodlee. If you are experiencing what I had with a third party aggregator, why spend the money?

Besides an excel spread sheet, Blueleaf has the best in pricing. The fees for Blueleaf mentioned in the article would be reduced by at least $200 should you not use BAA.

ReportingPerhaps it’s my clientele, but their focus tends to be macro and results oriented. What was my balance last quarter? This quarter? And how am I doing compared to the over all market? So while other PMR software may offer more types of reports, I personally don’t use them.

Bonus FeatureEach Sunday, my clients receive an update via e-mail. It gives them a week-over-week snap shot of their portfolio. If the client wants more detail, they can open the report up for more detail. This gives the advisor 52 additional contacts with their client.

The FutureI compare most vendors to the first 5 lb mobile phone. Blueleaf could best be compared to the latest i-Phone. And like Apple, Blueleaf continually raises the bar for the other players. Blueleaf is adding third party software, such as Redtail, While this is a value added feature, I personally hope Blueleaf designs their own Advisor Suite with CRM and Planning tools.

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